Co-operative Associations Act

Transcription

1 Co-operative Associations Act CHAPTER 98 OF THE REVISED STATUTES, 1989 as amended by 2001, c. 41, ss. 1-23; 2008, c. 50; 2011, c. 5, s. 363; 2014, c. 34, s Her Majesty the Queen in right of the Province of Nova Scotia Published by Authority of the Speaker of the House of Assembly Halifax

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3 CHAPTER 98 OF THE REVISED STATUTES, 1989 amended 2001, c. 41, ss. 1-23; 2008, c. 50; 2011, c. 5, s. 363; 2014, c. 34, s. 5 An Act to Amend, Revise and Consolidate the Law Respecting Co-operative Associations Table of Contents (The table of contents is not part of the statutes) Section Short Title Short title... 1 Interpretation Interpretation... 2 Purpose of Act Purpose of Act... 3 Application of Act Application of Act... 4 Administration Inspector... 5 Incorporation Formation of association... 6 Association limited by shares... 7 Association limited by membership... 8 Signing of articles of association Names Approval of articles of incorporation Registration of articles of incorporation Certificate of incorporation Articles and by-laws bind association and members Powers of association Powers of natural person... 16A Articles of incorporation... 16B Amendment of Articles Amendment of articles of incorporation Change of name Preference Shares Preference shares Regulations and By-laws Regulations and by-laws... 21

4 2 co-operative associations R.S., c. 98 Registered Office Registered office Notice to Inspector and Registrar Membership, Shares and Loans Register Application for membership Money payable as debt due Shares paid for by instalment Designation of Beneficiary Designation of beneficiary Withdrawal or Exclusion of Member Withdrawal or exclusion of members Meetings of Members Meetings Voting, delegates and books Filing of special resolution Board of Directors Board of directors Contracts Contracts Borrowing from Members Borrowing from members Distribution of Earnings or Assets Distribution of savings Investment of Patronage Rebates Investment of patronage rebate Lending of patronage rebate Distribution of gains Audits and Financial Records Appointment, removal and report of auditor Books of account and audited financial statements Statement sent to Inspector Amalgamation Amalgamation Winding Up and Dissolution Dissolution of association Association not in business Dissolution by Minister Compliance with Sections 41 and Appointment of liquidator Commencement of winding up Association ceases to carry on business... 50

5 R.S., c. 98 co-operative associations 3 Appointment of two or more liquidators Duties and powers of liquidator Date for sending in claims Payment of wages takes priority Payment of costs Remuneration of liquidator Statutory declaration after winding up Association may still be sued Limitation on responsibility for records Effects of winding up Payment of balance by liquidator Non-profit Associations Non-profit association... Prohibition... Prohibition... Profit... Prohibition... Non-profit association... Distribution of property upon dissolution... 61A 61B 61C 61D 61E 61F 61G Offences Offence and penalty Fees Fees Regulations Regulations Schedule SHORT TITLE Short title 1 This Act may be cited as the Co-operative Associations Act. R.S., c. 98, s. 1. INTERPRETATION Interpretation 2 In this Act, (a) association means an association incorporated under this Act and an association to which this Act applies; (b) board means the board of directors of an association; (c) by-laws means the by-laws made by an association; (d) co-operative basis means the carrying on of an enterprise organized, operated and administered in accordance with the following principles and methods:

6 4 co-operative associations R.S., c. 98 (i) each member or delegate has only one vote, (ii) no member or delegate may vote by proxy, (iii) interest or dividends on share or loan capital is limited to the percentage fixed in the articles of incorporation, or by-laws of the association, (iv) the enterprise is operated as nearly as possible at cost after providing for reasonable reserves and the payment or crediting of interest or dividends on share or loan capital, and any surplus funds arising from the business of the organization, after providing for such reasonable reserves or dividends, unless used to maintain or improve services of the organization for its members or donated for community welfare or the propagation of co-operative principles, are distributed in whole or in part among the members or the members and patrons of the organization in proportion to the volume of business they have done with or through the organization, and (v) the shares in the capital stock of a co-operative association except for those referred to in Section 20, do not have attached any special preferences, rights, conditions, restrictions, limitations or prohibitions either by the articles of incorporation, amalgamation agreement, certificate of incorporation or of amalgamation, by-laws or otherwise, and shall not be redeemed at more than par value or purchased by the association at less than par value without the approval of the Inspector; (e) housing association means an association that has as its primary purpose the provision of housing accommodation for occupancy by its members as nearly as possible at cost or that is operated in such a manner; (f) immediate family, when used to indicate a relationship with any person, means (i) any spouse or child of the person, (ii) any relative of the person, or (iii) any relative of the spouse of the person, if that spouse, child or relative is living in the same home as the person; (g) Inspector means the Inspector of co-operative associations and includes any person authorized by the Minister to perform the duties of the Inspector in his absence or incapacity or when the office of Inspector is vacant; (h) loan capital includes a sum contributed to an association by a member, in his capacity as a member, (i) by way of contributions to capital otherwise than by the purchase of shares or the making of loans under Section 35, or

7 R.S., c. 98 co-operative associations 5 (ii) by allocation or payment pursuant to Section 38 or pursuant to an enactment, of net earnings or other sums available for distribution to members; (i) member means a person, association, society, partnership, corporation or institution that pursuant to the by-laws of an association is a member of the association and, in any case, includes a person who has subscribed to the articles of incorporation; (j) Minister means the Minister of Service Nova Scotia or other member of the Executive Council who has the general administration of this Act; (k) officer includes a president, chairman, secretary, treasurer, member of a board of directors or other person empowered under this Act, the regulations or the by-laws to give directions relating to the business of the association; (l) Registrar means the Registrar of Joint Stock Companies and includes the Deputy Registrar or such person as the Governor in Council may from time to time authorize to perform the duties of the Registrar; (m) regulations means regulations made by the Governor in Council pursuant to this Act; (n) special resolution means a resolution passed, at a special or annual meeting of the association in respect of which notice specifying the intention to propose the resolution as a special resolution has been given in the manner provided by the by-laws of the association, by (i) not less than two thirds of the votes cast by such members of the association entitled to vote as are present in person at the meeting, or (ii) such greater proportion of the votes cast as the by-laws require, and approved by the Inspector and filed with the Registrar. R.S., c. 98, s. 2; 2001, c. 41, s. 1; 2014, c. 34, s. 5. PURPOSE OF ACT Purpose of Act 3 The purpose of this Act is to provide for the incorporation, inspection, examination and supervision of associations whose primary purpose is to provide service to its members and which belong to the people who use the services, the control of which rests equally with all the members, and the gains from which are distributed among the members in proportion to the use they make of the services. R.S., c. 98, s. 3.

8 6 co-operative associations R.S., c. 98 APPLICATION OF ACT Application of Act 4 (1) This Act applies to all associations incorporated under this Act and to all associations to which Chapter 57 of the Revised Statutes, 1967, the Co-operative Associations Act, applied before the first day of August, c. 98, s. 4. (2) The Companies Act does not apply to an association. R.S., ADMINISTRATION Inspector 5 (1) The Governor in Council may appoint such inspectors of cooperatives as are necessary for the administration of this Act. (2) The Inspector (a) shall examine the articles of incorporation and by-laws of all proposed associations desiring to be incorporated under this Act, inquire into the conditions under which any proposed association is intended to operate and approve or refuse to approve any articles and by-laws; (b) may on the Inspector's own motion, and shall, upon requisition in writing signed by (i) fifty per cent of the members where there are ten or fewer members of the association, or (ii) six members or ten per cent of the members, whichever is the greater number, where there are more than ten members of the association, each of whom must have been a member of the association for at least twelve months preceding the date of the requisition, investigate, inspect, inquire and examine into the affairs and business of any association and report thereon to the board or to the members, or to both, whichever in the Inspector's opinion is appropriate; (c) shall receive and file all returns and reports made by each association pursuant to this Act; (d) shall prepare and deliver to the Minister each year in such form as he may require a report showing the number of associations operating in the Province and the financial standing of each association; (e) shall report annually to the Minister respecting associations in the Province; (f) shall perform such other duties as may be required under this Act and as the Minister may from time to time direct.

9 R.S., c. 98 co-operative associations 7 (3) The Inspector may examine on oath the officers, agents and servants of any association in relation to its affairs and business and it shall be the duty of such officers, agents and servants to produce to the Inspector at his request any or all of the books and documents in their custody and power. (4) Failure of a person to produce upon request of an Inspector any book or document or failure to answer any question relating to the affairs or business of the association shall constitute an offence against this Act and a person found guilty shall be liable on summary conviction to a penalty not exceeding one hundred dollars in respect of each offence. R.S., c. 98, s. 5; 2001, c. 41, s. 2. INCORPORATION Formation of association 6 Any three or more persons of the age of majority or any two or more associations may, by subscribing their names to articles of incorporation in the form contained in the Schedule to this Act and otherwise complying with the requirements of this Act respecting incorporation, form an association for the purpose of establishing and carrying on, on a co-operative basis, any lawful business, enterprise or service, other than that of a banking, a loan, a trust or an insurance company, either with or without capital divided into shares, that is to say either (a) an association with capital divided into shares having the liability of its members limited by the articles of incorporation to the amount, if any, unpaid on the shares respectively held by them, in this Act termed as an association limited by shares ; or (b) an association without capital divided into shares having the liability of its members limited by the articles of incorporation to the amount, if any, unpaid on the membership fee which each member undertakes to contribute to the association, in this Act termed an association limited by membership. R.S., c. 98, s. 6. Association limited by shares 7 In the case of an association limited by shares, (a) the articles of incorporation shall state (i) the name of the association with the word Co-operative as a part of its name and with Limited as the last word in its name, (ii) the objects of the association, (iii) that the liability of the members is limited, and (iv) the par value of the shares; (b) no subscriber to the articles of incorporation may subscribe for less than one share; and

10 8 co-operative associations R.S., c. 98 (c) each subscriber shall write opposite his name the number of shares he subscribes for and his address. R.S., c. 98, s. 7. Association limited by membership 8 In the case of an association limited by membership, (a) the articles of incorporation shall state (i) the name of the association with the word Co-operative as a part of its name and with Limited as the last word in its name, (ii) the objects of the association, (iii) that the liability of the members is limited, and (iv) that amount of annual or other periodic membership fee as is prescribed by the by-laws; (b) each subscriber shall write his address opposite his name. R.S., c. 98, s repealed 2001, c. 41, s. 3. Signing of articles of association 10 The articles of incorporation shall be signed by each subscriber in the presence of at least one witness, each of whom shall sign his name and write his address. R.S., c. 98, s. 10. Names 11 (1) Notwithstanding Sections 7 and 8, an association (a) may have the word Co-opérative or co-opérative as part of its name in place of the word Co-operative ; (b) may have the word Limitée or the contraction Ltd or the contraction Ltée as the last word in its name in place of the word Limited. (2) No person doing business in the Province shall use the word co-operative or any abbreviation or derivation thereof as part of its name with respect to its services or its method of conducting business or hold itself out to the public in advertisements, literature, signs, announcements or in any other manner to be co-operative unless (a) incorporated under or subject to this Act; (b) incorporated by or under the Canada Cooperative Associations Act;

11 R.S., c. 98 co-operative associations 9 (c) incorporated by or under an Act of the legislature of a province that authorizes either expressly or by implication the use of the word co-operative ; or (d) incorporated by or under an Act of the Legislature that authorizes either expressly or by implication the use of the word cooperative. R.S., c. 98, s. 11. Approval of articles of incorporation 12 (1) Two copies of the articles of incorporation, together with a deposit of the fees payable to the Registrar, set out in the Schedule to this Act and two copies of the by-laws signed by the subscribers to the articles of incorporation shall be submitted to the Inspector, who on approval thereof shall endorse thereon a certificate to that effect, dated and signed by him, and shall thereupon transmit to the Registrar one copy of the articles of incorporation and one copy of the by-laws. (2) If the Inspector does not approve the articles of incorporation and by-laws he shall return them together with the deposit to the proposed association with a statement of his reasons for not approving them. (3) A subscriber who is dissatisfied with the refusal of the Inspector to approve articles of incorporation and by-laws may, within thirty days of the refusal, appeal to the Minister who may confirm, vary or reverse the decision of the Inspector. R.S., c. 98, s. 12. Registration of articles of incorporation 13 (1) Subject to subsection (2), on receipt of articles of incorporation and by-laws duly approved by the Inspector or the Minister in case of appeal, the Registrar shall register them. (2) The Registrar shall not register articles of incorporation and by-laws of an association (a) whose name is identical with that of any other subsisting association or company incorporated or otherwise, or so nearly resembling the same as to be calculated to deceive except where such subsisting association or company is in the course of being dissolved and testifies its consent in such manner as the Registrar requires; (b) without the consent of the Governor in Council whose name contains the words Royal or Imperial or which in the opinion of the Registrar suggests or is calculated to suggest the patronage of Her Majesty or any member of the Royal Family or connection with Her Majesty's Government or any department or agency thereof; or (c) whose name is otherwise objectionable. R.S., c. 98, s. 13.

12 10 co-operative associations R.S., c. 98 Certificate of incorporation 14 (1) On registration of articles of incorporation and by-laws the Registrar shall certify under his hand that the association is incorporated under this Act. (2) A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act respecting incorporation have been complied with and that the association is incorporated under this Act. (3) From the date of incorporation mentioned in the certificate of incorporation the subscribers to the articles of incorporation together with such other persons as may from time to time become members of the association shall be a body corporate by the name mentioned in the certificate of incorporation, capable forthwith of exercising all the functions of an incorporated association and having perpetual succession and a common seal with power to hold lands, but with such liability on the part of the members to contribute to the assets of the association in the event of its being wound up as is mentioned in this Act. R.S., c. 98, s. 14. Articles and by-laws bind association and members 15 The articles of incorporation and by-laws bind the association and the members thereof to the same extent as if they respectively had been signed and sealed by each member, his heirs, executors and administrators, to observe all the provisions of the articles and of the by-laws subject to this Act. R.S., c. 98, s. 15. Powers of association 16 Every association shall have, in addition to the acts and things included in the objects set out in its articles of incorporation, all power and capacity, as if the same were included among the purposes and objects set out in its articles of incorporation, necessary to enable it to (a) buy, sell, grow, produce, manufacture, repair, alter, exchange, store, and deal in all articles or things within the scope of its objects as set forth in its articles of incorporation; (b) purchase, take on lease or in exchange, hire or otherwise acquire or hold any real or personal property which the association may deem necessary or convenient for the purpose of its business; (c) subject to the approval of the Inspector or with the sanction of an [a] special resolution, sell, mortgage, lease or otherwise dispose of the property or undertakings of the association or any part thereof; (d) subject to the approval of the Inspector or the sanction of an [a] special resolution, guarantee the performance of obligations or contracts of any other person and, as security for such guarantee, charge the whole or any part of the property of the association; (e) construct, improve, maintain, develop, work, manage, carry out or control any roads, ways, sidings, factories, warehouses, tanks, shops,

13 R.S., c. 98 co-operative associations 11 stores and other works and conveniences which may seem calculated directly or indirectly to advance the interests of the association, and contribute to, subsidize or otherwise assist or take part in the construction, improvement, maintenance, working management, carrying out or control thereof; (f) undertake and carry on all kinds of businesses or operations with the marketing, buying, selling, preserving, harvesting, drying, processing, manufacturing, canning, packing, grading, storing, handling or utilizing of any product, or the manufacturing or marketing of the by-products thereof; (g) acquire or hire supplies, machinery or equipment, and make provision for the sale or hire, or for the extension of the use of the same to its members or patrons; (h) with the sanction of an [a] special resolution, acquire or undertake the whole or any part of the business, property, liabilities and undertaking of any other association, person, company or society, carrying on any business which the association is authorized to carry on, or possessed of property suitable for the purpose of the association; (i) with the sanction of an [a] special resolution, take or otherwise acquire and hold shares, stock, debentures or take securities of or acquire and hold membership in any other company, association or society incorporated under any Act of any province of Canada or under any Act of the Province or of Canada having objects wholly or in part similar to those of the association, and sell or otherwise deal with the same; (j) subject to the approval of the Inspector, enter into any agreement for co-operation, joint adventure, reciprocal concession or otherwise with any other association, with any person or company, having objects wholly or in part similar to the objects of the association or engaged in any business or enterprise capable of being conducted so as directly or indirectly to benefit the association; (k) enter into arrangements with any authorities, governmental, municipal, local or otherwise, that may seem conducive to the attainment of the association's objects, or any of them, and obtain from such authority any rights, privileges and concessions which the association may have capacity to receive and may think desirable to obtain, and carry out, exercise and comply with any such arrangements, rights, privileges and concessions; (l) establish and support or aid in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the association or its predecessors in business, or the dependents or relatives of such persons, and grant pensions and allowances, and make payments towards insurance, and subscribe or guarantee money for charitable or benevolent objects, or for any public, general or useful object; (m) draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments;

14 12 co-operative associations R.S., c. 98 (n) borrow and secure the payment of money in accordance with the provisions set forth in the by-laws and upon such terms and conditions as the board of directors may from time to time determine; (o) invest the money of the association not immediately required in the business of the association in such manner as may from time to time be determined by the board of directors acting honestly and in good faith with a view to the best interest of the association and exercising the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances; (p) take or hold mortgages, hypothecs, liens and charges to secure payment of the price of any part of the property of the association of whatever kind sold by the association or any money due to the association from purchasers and others and assign or otherwise dispose of the said mortgages, hypothecs, liens and charges; (q) carry on, encourage and assist educational and advisory work relating to co-operative activities; (r) enlarge the area of its operations by the establishment of branches or other means subject to this Act with respect to the establishment of branches; (s) accept money on deposit from its members for future purchase of goods or services by the members, provided that an association accepting deposit money from its members shall keep such money available to the member or at his demand; (t) generally carry on or undertake any business which may seem capable of being conveniently carried on or undertaken in connection with the business of the association, or calculated directly or indirectly to enhance the value of or render profitable any property or rights of the association; (u) do all or any of the above things as principal, agent, contractor or otherwise and by or through trustees, agents or otherwise and either alone or in conjunction with others; (v) do all other things which are incidental or conducive to the attainment of the objects and the exercise of the powers of the association; (w) with the authority of an [a] special resolution and with the approval of the Minister, apply for a certificate of continuation which will permit the co-operative to continue as a corporation to which an Act of the Parliament of Canada applies. R.S., c. 98, s. 16; 2001, c. 41, s. 23. Powers of natural person 16A Subject to this Act, an association has the capacity, rights, powers and privileges of a natural person. 2001, c. 41, s. 4.

15 R.S., c. 98 co-operative associations 13 Articles of incorporation 16B The articles of incorporation of an association incorporated on or after the thirteenth day of November, 2001, shall state whether or not the association is a non-profit association within the meaning of Section 61A. 2001, c. 41, s repealed 2011, c. 5, s AMENDMENT OF ARTICLES Amendment of articles of incorporation 18 (1) An association, with the sanction of an [a] special resolution, may alter or amend its articles of incorporation with respect to the objects of the association so far as may be required to enable it to (a) carry on some business which under existing conditions may conveniently or advantageously be combined with the business of the association; (b) restrict or abandon any of the objects or powers in the articles or in Section 16; or (c) enlarge or change the area of its operations. (2) An association, with the sanction of an [a] special resolution, may alter or amend its articles of incorporation with respect to the qualifications for admission of members. (3) A certificate of the Registrar that a certified copy of such special resolution has been filed together with a copy of the articles as altered shall be conclusive evidence that all the requirements of this Act with respect to the alteration of the articles have been complied with and thenceforth the articles as altered shall be the articles of the association. R.S., c. 98, s. 18; 2001, c. 41, ss. 5, 23. Change of name 19 (1) Subject to the provisions of Section 13 and with the approval of the Registrar, an association may, by special resolution, change its name and in the special resolution fix the date on which the change of name will become effective, and, if such approval is given, the Registrar shall on the date on which the change of name becomes effective enter the new name on the register in place of the former name and shall issue a certificate of incorporation altered to meet the circumstances of the case. (2) If an association through inadvertence or otherwise is or has been registerd [registered] by a name (a) identical with that of any other subsisting association or company incorporated or unincorporated, or which the Registrar deems so nearly to resemble the same as to be calculated to deceive,

16 14 co-operative associations R.S., c. 98 or contains any words prohibited under Section 13 except in a case in which such consent as aforesaid has been given; or (b) which the Registrar deems to be otherwise objectionable by reason of this Section or otherwise, the association shall, upon the direction of the Registrar, change its name, and if any association fails to change its name within two months after being so directed, the Registrar may change its name to any name he deems to be unobjectionable and upon the change being made the Registrar shall issue a new certificate of incorporation altered to meet the circumstances of the case. (3) No alteration of the name of an association shall affect the rights or obligations of the association or render defective any legal proceedings instituted or to be instituted by or against the association and any legal proceedings may be continued or commenced against the association by its new name that might have been continued or commenced against the association by the former name. R.S., c. 98, s. 19; 2001, c. 41, s. 23. PREFERENCE SHARES Preference shares 20 (1) An association may issue one or more classes of non-voting preference shares. (1A) The classes of preference shares referred to in subsection (1) are subject to the terms and conditions provided for in the by-laws of the association. (1B) The holder of preference shares may dissent if the association (a) amends its by-laws to add, change or remove the rights, privileges, restrictions or conditions attached to preference shares; (b) amends its articles of incorporation or by-laws to add, change or remove any restrictions on the business or businesses that the association carries on; (c) amalgamates with another association; (d) continues under the laws of another jurisdiction; or (e) sells, leases or exchanges all or substantially all of its property other than in the ordinary course of business. (1C) Notwithstanding subsection (2) of Section 4, the Third Schedule of the Companies Act applies mutatis mutandis to dissent procedures for associations and preference shareholders. (2) No preference shares shall be redeemed or purchased by an association if there are reasonable grounds to believe that

17 R.S., c. 98 co-operative associations 15 (a) the association is, or would be after the payment, unable to pay its liabilities as they become due; or (b) the realizable value of the association s assets after the payment would be less than the total of the par value of all its issued shares and liabilities. (3) There shall be included in every balance sheet of an association which has issued preference shares a statement specifying what part of the capital of the association consists of such shares. (4) Where an association has issued preference shares which by the provisions attaching thereto may be redeemed or purchased by the association, the association may, subject to this Section, redeem or purchase such shares on such terms and in such manner as may be provided by the by-laws of the association and by the provisions attaching to the said shares and in accordance with any price or formula set out in its articles, by-laws or provisions attached to the said shares or, if none so provides, at fair market value. (5) Where any such preference shares have been redeemed or purchased by the association, it shall, within one month after so doing, give notice thereof to the Inspector, specifying the number and value of shares so redeemed or purchased and in the amount at which each share was so redeemed or purchased. R.S., c. 98, s. 20; 2008, c. 50, s. 1. REGULATIONS AND BY-LAWS Regulations and by-laws 21 (1) The Governor in Council may make regulations not inconsistent with this Act and such regulations shall apply to every association. (2) An association may make by-laws not inconsistent with this Act or the regulations. (3) The by-laws when approved by the Inspector and filed with the Registrar bind the members of the association to the same extent as if they had been signed and sealed by each member and contain covenants on the part of each member, his heirs, executors, administrators and successors to observe the by-laws subject to this Act. R.S., c. 98, s. 21. REGISTERED OFFICE Registered office 22 Every association shall have a registered office in the Province, to which all communication and notices may be addressed. R.S., c. 98, s. 22.

18 16 co-operative associations R.S., c. 98 Notice to Inspector and Registrar 23 An association shall give to the Inspector and the Registrar notice of the place of the registered office and of any changes therein within twenty-eight days after the date of the incorporation of the association or of the change, as the case may be. R.S., c. 98, s. 23. MEMBERSHIP, SHARES AND LOANS Register 24 (1) Every association shall keep a register of members and enter therein the following particulars in respect of each member: (a) the names and addresses of members; (b) the date at which each person became a member; (c) the date at which each person ceased to be a member; and (d) the name and address of each person nominated by a member as his beneficiary and the date of the nominations. (2) Every association having share capital shall keep a share register and enter therein a statement of the shares held by each member and of the amount paid and agreed to be considered as paid by the member. (2A) Every association that has loan capital or that borrows from its members shall keep a loan register and maintain in the register a current statement of the loan capital of each member and the amount outstanding of any money borrowed from each member. (3) The register of members shall be kept at the registered office of the association and shall, subject to such reasonable restrictions as the association may in general meeting impose, be open to the inspection of any member free of charge. (4) The share register shall be kept at the registered office of the association and, subject to such reasonable restrictions as the association may in general meeting impose, a shareholder may inspect the portion of the register in which particulars of his share holdings are entered. (4A) The loan register shall be kept at the registered office of the association and, subject to such reasonable restrictions as the association may in general meeting impose, a member may inspect the portion of the register in which particulars of the member's loan capital or the amount borrowed from the member are entered. (5) The register of members, the share register and the loan register shall be prima facie evidence of the facts set forth therein. R.S., c. 98, s. 24; 2001, c. 41, s. 7.

19 R.S., c. 98 co-operative associations 17 Application for membership 25 Application for membership in any association shall be made in writing to the board of directors and no application for membership shall be accepted and no allotment, assignment or transfer of a share or membership shall be valid unless and until approved by the board of directors in accordance with the provisions set forth by the by-laws of the association. R.S., c. 98, s. 25. Money payable as debt due 26 (1) All money payable by a member to an association shall be a debt due from the member to the association and is recoverable as such. (2) An association has a charge upon the shares or interest in the capital and on the deposits of a member or past member, and upon any dividend, bonus or accumulated funds payable to a member or past member, in respect of any debt due from that member or past member to the association, and may set off any sum credited or payable to the member or past member in or toward payment of any such debt. R.S., c. 98, s. 26. Shares paid for by instalment 27 Any share may be paid for by instalments at such times and in such manner as may be provided by the by-laws, but no member shall be entitled to draw from surplus anything based on more than the paid-up portion of his shares. R.S., c. 98, s. 27. DESIGNATION OF BENEFICIARY Designation of beneficiary 28 (1) A member of an association who has attained the age of majority may, by writing under his hand, delivered at or sent to the registered office of the association nominate any person to whom his shares, loan capital, deposits or other interest in the association shall be transferred at his decease and may from time to time revoke or vary the nomination by writing under his hand similarly delivered or sent. (2) Subject to approval of the board, the shares affected by the nomination shall be transferable to the nominee although the by-laws of the association declare its shares to be generally not transferable. (3) Upon receiving satisfactory proof of the death of a member (a) who had filed a nomination pursuant to subsection (1); and (b) whose shares, loan capital, deposits and other interest do not at the date of his death exceed in value a total of two thousand dollars, if no executor or administrator of the estate of such member is appointed within six months from the date of his death, the directors may either transfer such shares, loan

20 18 co-operative associations R.S., c. 98 capital, deposits and other interest in the manner directed by the nomination or, at their option, pay to the person entitled thereunder the full value of the same. (4) If a member of an association entitled at his death to an interest in the association of a total value of not more than two thousand dollars in respect of shares, loan capital, deposits and other interest dies intestate and without having made a nomination under this Act which remains unrevoked at his death and if no administrator of the estate of such member is appointed within six months of his death the directors may transfer such shares, loan capital, deposits and other interest or, at their option, pay the value thereof to or among the persons who appear to a majority of the directors, upon such evidence as they may deem satisfactory, to be entitled by law to receive the same. (5) Where a member who had made a nomination under subsection (1) subsequently makes a will that is inconsistent with the nomination and is unrevoked at the time of his death the will operates as a revocation of the nomination. R.S., c. 98, s. 28; 2001, c. 41, s. 8. WITHDRAWAL OR EXCLUSION OF MEMBER Withdrawal or exclusion of members 29 (1) A member may, in the manner prescribed by the by-laws and with the approval of the board of directors, withdraw from membership in the association, whereupon he shall, subject to the regulations and the by-laws, be entitled to a refund of any amount held to his credit in share capital or otherwise in the association and upon which the association has no charge or other lawful claim but (a) the board of directors may require notice not exceeding six months of any proposed withdrawal of a member's capital or other equity; (b) if the value of the shares as determined by the directors and approved by the Inspector is less than par, the board of directors shall have the right to refund to a withdrawing member only such proportion of the par value of his shares as may appear to it to be just and reasonable; (c) the association shall not be required to permit the withdrawal of a member's capital or other interest at any time when in the opinion of the board of directors such withdrawal would impair the financial stability of the association. (2) A member who fails in the observance of any of the regulations or the by-laws of the association may, by resolution of the board of directors, be excluded from membership in the association whereupon he shall be entitled to a refund of any amount held to his credit in share capital or loan capital and deposits and upon which the association has no lien or other lawful claim but (a) notice shall be sent by the board of directors by registered mail to such member to his last known address setting forth a

21 R.S., c. 98 co-operative associations 19 date not sooner than one month after the date of mailing the notice upon which he is to be excluded from membership in the association and stating the reasons therefor; (b) the member so notified, if he is not satisfied with the decision of the board, may at any time before the date upon which it is proposed that he is to be excluded from membership in the association request the board to place the matter on the agenda for consideration by the membership during the next special or general meeting of the members; and (c) the member who has been notified that he is to be excluded from the association shall have the right to appear personally before the meeting to give reasons why he should not be excluded after which the question shall be submitted to a vote of the meeting and the decision of the meeting thereon shall be final. R.S., c. 98, s. 29. MEETINGS OF MEMBERS Meetings 30 (1) Every association shall hold an organizational meeting within four months from the date of incorporation, and thereafter an annual meeting of every association shall be held not later than four months after the end of each fiscal year. (2) When default has been made in holding an organizational meeting or an annual meeting of the association in accordance with this Section, the Inspector may call, or direct the calling of, a special meeting of the association. (3) A special meeting may be called at any time in the manner set forth in the by-laws of the association. (4) The notice calling an annual or special meeting of the association shall be in such form and given in such manner as may be set forth in the by-laws. R.S., c. 98, s. 30. Voting, delegates and books 31 (1) At all meetings of an association a member shall have one vote only on any question regardless of the number of shares held by him and, excepting where provision is made for representation by delegates, no member may vote by proxy. (2) Whenever by virtue of the by-laws of an association provision has been made for the nomination and appointment of delegates to an annual or special meeting, the members who have so nominated or appointed delegates shall not thereafter so long as such nomination or appointment remains in force exercise the power of membership at any annual or special meeting and any reference in this Act

22 20 co-operative associations R.S., c. 98 to members shall with respect to the exercise of such power be deemed to be a reference to delegates. (3) Whenever by virtue of the by-laws of an association provision is made for the election of directors of the association by members or delegates voting by districts, directors so chosen shall be deemed elected by all the members or delegates attending the said meeting to the same extent as if all the members or delegates had been present at such meeting. (4) An association, if it is a member of another association formed under this Act or of an association to which this Act applies, or if not inconsistent with the Canada Cooperative Associations Act or an association formed or incorporated under that Act, may, in accordance with the provisions of its by-laws, authorize such person as it thinks fit to act as its delegate at any meeting of such association or company, and a person so authorized shall be entitled to exercise the same powers on behalf of the association which it represents as that association could exercise if it were an individual member. (5) Every association shall cause minutes of all proceedings of annual or special meetings to be entered in a book kept for that purpose and any such minutes if purporting to be signed by the chairman of the meeting at which the proceedings were had, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings. (6) The books containing the minutes of proceedings of any annual or special meeting of an association shall be kept at the registered office of the association and shall, during at least two hours in each business day, be open to the inspection of any member without charge. R.S., c. 98, s. 31. Filing of special resolution 32 (1) A copy of every special resolution duly certified by the secretary of the association shall, within fifteen days from the passing thereof, be forwarded to the Inspector, who upon approval thereof shall transmit the resolution to the Registrar who shall file the same. (2) If the Inspector does not approve the special resolution, he shall return the same to the association with a statement of his reasons for not approving thereof. (3) An [A] special resolution shall not be valid unless and until it is filed with the Registrar. R.S., c. 98, s. 32; 2001, c. 41, s. 23. BOARD OF DIRECTORS Board of directors 33 (1) The articles of incorporation of an association shall include or be accompanied by a list of the names and addresses of not fewer than three and not more than seven persons to be first directors of the association and the persons so

23 R.S., c. 98 co-operative associations 21 named shall hold office until a board of directors is elected pursuant to subsection (2). (2) The members of every association shall within four months after the date of its incorporation elect a board of directors of such number of members and in such manner and for such term as are provided in the regulations, but in no case shall the board of directors be fewer than three duly qualified members. (3) Subject to the regulations and by-laws, the affairs of an association shall be managed by the board of directors. (4) The qualifications, powers and duties of the directors shall be as set forth in the regulations and by-laws. (5) If a director fails to qualify himself for the office of director in accordance with the regulations and by-laws within two months after the date of his election or if he fails in the discharge of any of the duties of his office, the board of directors may declare his office vacant and the vacancy so created shall be filled by appointment by the remaining directors until the date of the next annual meeting or until such other date as may be fixed by the by-laws. (6) At any annual meeting or at a special meeting called for the purpose the members of the association by a vote of not less than two thirds of the members who are present and entitled to vote may remove a director from office before his term of office has expired. (7) If a vacancy occurs in the board of directors by reason of death or resignation or other cause the vacancy so created shall be filled by appointment by the remaining directors until the date of the next annual meeting or until such other date as may be fixed by the by-laws. (8) No act of the board shall be invalid by reason only of a defect in the appointment or qualification of any director or directors. (9) The board of directors shall cause minutes of all proceedings of directors' meetings to be entered in a book kept for that purpose and any such minutes if purporting to be signed by the chairman of the meeting at which the proceedings were had or by the chairman of the next succeeding meeting shall be prima facie evidence of the proceedings. (10) The books containing the minutes of directors' meetings shall be kept in the custody of such officer of the association as is designated in the by-laws and shall at least during two hours in each business day be open to the inspection of any director without charge. R.S., c. 98, s. 33; 2001, c. 41, s. 9.

24 22 co-operative associations R.S., c. 98 CONTRACTS Contracts 34 (1) Contracts on behalf of an association may be made as follows: (a) any contract, which if made between private persons would be by law required to be in writing and to be under seal, may be made on behalf of the association in writing under the common seal of the association and may in the same manner be varied or discharged; (b) any contract, which if made between private persons would be by law required to be in writing and signed by the parties thereto, may be made on behalf of the association in writing signed by any person acting under its authority, express or implied, and may in the same manner be varied or discharged; (c) any contract, which if made between private persons would by law be valid, although made by parol only and not reduced into writing, may be made by parol on behalf of the association by any person acting under its authority, express or implied, and may in the same manner be varied or discharged. (2) The association may make marketing contracts with any of its members or any group or class of its members requiring them to sell for a period of time not over five years all or any part of their products specified in the contracts, exclusively to or through the association or any agency created or indicated by the association. (3) Where a member of an association having entered into a marketing contract with the association does not within twelve months of the date of a contract make delivery of the products or commodities which he is required by the contract to deliver, he may be excluded from membership in the association in accordance with subsection (2) of Section 29. (4) The board of directors shall have power from time to time by resolution to pay over to the members of the association such part of the price of the commodity or commodities so sold as it shall deem advisable, but such resolution shall not be deemed to create a debt due or payable by the association to the members or any of them. R.S., c. 98, s. 34. BORROWING FROM MEMBERS Borrowing from members 35 An association may, by by-law, authorize the borrowing of money from its members for definite periods of time and at specific rates of interest. R.S., c. 98, s. 35.

25 R.S., c. 98 co-operative associations 23 DISTRIBUTION OF EARNINGS OR ASSETS Distribution of savings 36 (1) Subject to the other provisions of this Section and Sections 37 and 38, the net savings of the association or other amounts available for distribution by the association at the close of each fiscal year shall be paid or allocated in the manner set forth in the regulations and by-laws. (2) An association (a) shall set aside reserves in accordance with the regulations; (b) may provide for payment of interest to shareholders at a rate not exceeding a rate specified in the by-law. (3) An association shall not allocate or pay a patronage rebate which will create or increase a deficit. (4) Subject to the other provisions of this Section and to the by-laws, the net savings arising from the business of an association in each fiscal year of the association shall be allocated, credited or paid to the members in proportion to the business done by each member with or through the association, at a rate in relation to the quantity, quality or value of the goods or products acquired, marketed, handled, dealt in or sold, or services rendered by the member or the association, from or on behalf of or to the member or to the association whether as principal or as agent of the member or otherwise, with appropriate differences in the rate for different classes, grades or qualities thereof. (5) An association may, by by-law, provide that part of the savings referred to in subsection (1) may be allocated, credited or paid to patrons of the association at the same or at lesser rates than to members. (6) An association may, by by-law, provide that where the value or quantity of the goods or products acquired, marketed, handled, dealt in or sold, or services rendered by the association from or on behalf of or to any member or patron in any year does not exceed such amount as is specified in the by-law, no patronage rebate shall be allocated, credited or paid to such member or patron. R.S., c. 98, s. 36; 2001, c. 41, s. 10. INVESTMENT OF PATRONAGE REBATES Investment of patronage rebate 37 (1) An association may, by by-law, provide that the whole, or such part as the directors may determine, of the patronage rebate of each member in respect of each fiscal year shall be applied to the purchase for the member of shares in the capital stock of the association, and any such by-law shall provide for the giving of notice to each member of the number of shares to be purchased for him thereunder, for the manner of issuance or transfer of shares thereunder and the payment